Shares of Palladyne AI Corp. PDYN have declined sharply since its latest quarterly earnings announcement for the period ended June 30, 2025, declining 15.8% compared with the S&P 500’s 1.3% growth in the same time frame. Over the past month, PDYN shares are down 16.9%, while the broader index has gained 2.1%, underscoring the market’s unfavorable reaction to the company’s results and outlook.
For the second quarter, Palladyne AI incurred a loss of 20 cents, which remained unchanged from the prior-year quarter.
The company reported revenues of $1 million, a steep 63% drop from $2.7 million in the year-ago quarter, largely reflecting a decline in product development contract revenue.
The company incurred a net loss of $7.5 million, widening from a $5.3 million loss in the prior-year period. Operating expenses rose 7% year over year to $9.1 million, with a notable 33% increase in research and development spending due to product testing, debugging and enhancements, partially offset by modest reductions in general and administrative costs and sales and marketing expenses.
Palladyne AI Corp. Price, Consensus and EPS Surprise
Palladyne AI Corp. price-consensus-eps-surprise-chart | Palladyne AI Corp. Quote
Other Key Business Metrics
The six-month view shows an even starker revenue decline. For the first half of 2025, Palladyne AI generated $2.7 million in revenue, down 56% from $6.2 million a year earlier. This drop was driven by a 100% fall in product revenue following the discontinuation of legacy hardware sales, along with a 24% decrease in product development contract revenue. Year-to-date net income was $15.3 million, swinging from a $12.6 million loss in the prior year, though this was primarily due to a $29.4 million gain from changes in warrant liability values, a non-operating item.
The company’s backlog at June 30 stood at $1.7 million, about half of which is expected to be recognized within the next 12 months. Liquidity remains relatively strong, with $62.7 million in cash, cash equivalents, and marketable securities, up from $40.1 million at year-end 2024, aided by equity financings and warrant exercises.
Management Commentary
Management reiterated its mission to commercialize its AI/ML Foundational Technology through two software products: Palladyne IQ for industrial robots and cobots, and Palladyne Pilot for unmanned aerial platforms. Both remain in early commercialization, with initial customer deployments targeted for innovators and early adopters in industrial manufacturing, defense, and related sectors. The company anticipates modest revenue growth from commercial customers in 2025, with a more gradual ramp in 2026, and expects its sales cycle to average 12-18 months.
Factors Influencing Results
The year-over-year revenue decline primarily reflects timing and funding of government product development contracts, as well as the absence of hardware sales seen in 2024. The increase in R&D spending aligns with management’s focus on refining and stabilizing its AI-driven software platforms ahead of broader market deployment. The company’s profitability in the first half was heavily skewed by a one-time mark-to-market gain on warrants, masking underlying operational losses.
Guidance
Palladyne AI expects continued near-term losses as it invests in commercialization, with liquidity sufficient for at least the next 12 months. Management also signaled possible opportunistic capital raises to bolster reserves if favorable market conditions arise.
Other Developments
In July 2025, Palladyne AI sold 77,960 shares under its at-the-market equity program for gross proceeds of approximately $0.7 million, exhausting the program’s then-current capacity.
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